CANBERRA, Sept. 18 (Xinhua) -- The ongoing conflict in the Middle East has made Australians poorer and is driving upside risks to inflation, the head of the nation's central bank said on Friday.
Reserve Bank of Australia (RBA) Governor Michele Bullock told a parliamentary hearing in Canberra that upside risks to inflation appear to be materializing, with a spike in oil prices due to the conflict in the Middle East expected to add directly to inflation.
These supply shocks, the Middle East in particular, have worsened the trade-off between inflation and employment, she said.
"I think we have to acknowledge that the trade-off has got worse, that this particular Middle East shock has made us poorer, and we can't respond to that by letting inflation get out of control."
The RBA's Monetary Policy Board, which Bullock chairs, will next meet to consider interest rates at the end of September.
The board increased the cash rate target by 0.25 percentage points three times in the first six months of 2026, but kept the key interest rate on hold at 4.35 percent at its most recent meetings in June and August.
Bullock said the meeting at the end of September would consider whether the current rate will be sufficient to bring inflation back within the RBA's 2-3 percent target band within a reasonable time.
"It's more important than ever that we bring inflation back to target," she said.
The most recent data from the Australian Bureau of Statistics showed that annual inflation fell from 3.8 percent in June to 3.5 percent in July, which was the lowest figure since November 2025. ■